Saturday, May 28, 2011

Once again, Peggy Noonan shows off her delusional mental state...

Peggy Noonan has written some wonderful speeches in her day, but her columns in the WSJ are so married to ideology as to be fiction, rather than commentary. Here I express my alarm that such a prominent conservative voice pointed the finger of blame for the BP oil spill at Obama, instead of at BP, the hugely profitable, multi-national corporation that made the error-ridden business decisions leading up to the spill.

Today, Noonan's word of the day is "unsustainable."
"The American establishment, on both sides of the political divide, is admitting as never before that we are in an existential challenge. And this is progress. It was not always so! It wasn't so two years ago."
As Noonan acknowledges, many Americans outside of the "American establishment" recognized back in 2008 that it was time for a change - that the challenges facing America were severe, painful and absolutely needed to be addressed. That it's taken the "establishment" some years to catch on is a symptom of the blindness facing our leaders today.
"Elected officials began to get the message. Now they've got it. Our spending and debt are—and it is interesting that this is the first great buzzword of the new decade— 'unsustainable.'"
So who does Noonan feel is the savior of our  nation?

Thursday, May 26, 2011

Brad Delong (and other economists) are asking the wrong question

Since the economy crashed in 2008, Brad Delong has periodically wondered how the small losses seen recently in the securitized mortgage market have added up to the worst recession since the Great Depression. He's got such a post over on his blog today.

I am not an economist. But my big post-crisis question isn't how "a $2 trillion impulse in lost value of securitized mortgages has set in motion a financial accelerator that we do not understand at any deep level but that has led to ten times the total losses in financial wealth of the impulse."

My big question is: when did we become so dependent on debt at every level of our economy - consumer, banking, government? In 2008, leverage became the only pillar of our economy that was left standing, apparently, until it, too, crashed.

Brad Delong recognizes a key fact: "You need money to buy stuff. If you don't have money, you can't buy stuff--and so when you are short of money you cut back your spending because you must and so build your money balances back up."

For decades, our consumer-driven economy has been driven by consumers with shrinking budgets to work with. For me, the equation for our current crisis is thus:
Stagnant wages + rising health care costs + astronomical tuition that most consumers can pay for only by acquiring massive debt = consumers hanging on by a thread.
Add on a massive housing bubble, where the biggest asset for most Americans became a financial bomb that blew up their net worth = consumers terrified of losing everything + consumers who've lost everything.
Then add on a financial sector that proves beyond a shadow of a doubt to be corrupt and incompetent (all at once! And led by our best and brightest too, scores of Ivy-educated men who used their intelligence and training to create instruments of "innovation" that turned out to be weapons of mass destruction) and you've added the vivid and powerful emotion of panic into the recipe, which brings the cauldron of crisis to a boil. 
The problem, as I see it, is not in the numerical smallness of the loss. It's in the pervasiveness of the corruption that runs throughout our entire financial system. It's in the income inequity we've seen develop in the last quarter of a century. It's in the capture of our elected officials who cater to the lobbyists and not the voters.

In 2008, our financial sector failed. Capitalism in the most powerful nation on earth failed in 2008. Our entire banking system exists today only because of a massive and very costly federal welfare program. We privatized profit and socialized the losses of the biggest banks in America.

That's a terrible, horrible, no good very bad problem that cannot be summed up by a labeling it a "$2 trillion impulse."

Economists focused on numerical sums will never see this. And that's a big contributor to the "crisis in economics" that Delong has been also pondering.


NPR reports that consumers who are squeezed at the pump have pulled back on spending in other areas. The result is being felt on the economy.
"High gasoline prices, government budget cuts and weaker-than-expected consumer spending caused the economy to grow only weakly in the first three months of the year."
Thanks to NPR for pointing out the obvious - that higher gas prices cut into money consumers would rather spend elsewhere.

That's why the corporate leaders who feel that squeezing as much out of their employees for as little as possible are remarkably short-sighted. A consumer-driven economy needs consumers with funds to spend.

So dip into the profit goody bag and start giving employees much-deserved raises. Hire new talent to fill key positions. (There's a lot of talent looking for a compatible work hook-up right now, FYI.)

If business leaders want to sell their product, they need to make sure America's got consumers with money to put towards consumption. And by consumers, I mean the broader market beyond just the high-paid folks in the C-suite.

And if the GOP wants to continue to assert that stopping the only spender in town (the government) from spending is the best way to jump start the economy, good luck fellas! Way to remain blind to the evidence! Their "big idea" is not showing much traction today.

Wednesday, May 25, 2011

The man who wrote "Forever Young" just turned 70

If Bob Dylan turned 70 yesterday, it means the one time I saw him live in concert was ten years ago.

[A decade! It's flown. The baby I left with his grandparents so I could see Dylan perform heads off to middle-school next year...]

Ten years ago, Dylan was celebrating his 60th birthday by performing at state fairs (an odd choice of venue for the Greenwich Village poet of the Boomer generation). It was 2001, the same year Madonna was wandering the world on one of her widely publicized mega-tours, a huge show with numerous moving parts, you know, a show full of dancers, choreography, music and fog.

And then there was Dylan, playing in Springfield, IL. In August. At the State Fair.

It was a crowd of about 10,000. Not quite a full house, but close. The scent of clove cigarettes mingled with the odor of manure. As the sun began to set, we wandered from a draft horse competition to the racetrack where Dylan would be performing. 

[This was the pre-9/11 world we were living in. Bush was most likely on vacation (he spent a great deal of his first year in office on vacation, it seemed.) Cheney was mixing it up with reporters who wanted to know which oil execs had influenced his oil policy. Cheney's stock answer was that it was none of America's business. 

Just weeks later our world would crash down around us.]

That sultry night in August, Dylan strode on stage with his band, and never stopped singing until the show was done. His set list included a rousing version of All Along the Watchtower (one of my favorite Dylan songs) and a powerful rendition of Masters of War.

He said nothing at all to the audience. It was about his music. Only the music. 

When it was done, he walked off stage and onto the bus that would take him to another State Fair.

What he left with his audience - indelible memories of a man hard at work at a craft he loved more than anything else. No glitz. Certainly no glamor. Just the music and the master.

Though Dylan's shows can be unpredictable, the show he put on at the Illinois State Fair in 2001 was incredible.

Here's one of the first music videos ever created: Dylan playing Subterranean Homesick Blues...

And here's on older Dylan, dressed in a shiny gold shirt, growling out the tune "Forever Young" - accompanied by the Boss...

Springsteen-Dylan "Forever young" by betterday

Friday, May 20, 2011

A Master at Work

One of my girls was reading Easter Parade. Felt compelled to show her this, one of the greatest dance scenes ever filmed.

Ronald's not the reason why...

Though I applaud the physicians of America for going after the obesity epidemic (according to the Centers for Disease Control, 17% of children and adolescents are obese), lining up Ronald McDonald in their sights isn't exactly the right target.

More than 500 physicians have signed a letter to McDonalds, asking the corporation to retire Ronald. As reported in the WSJ, the letter says:
"The letter, slated to run in the form of full-page ads in six metropolitan newspapers around the country on Wednesday, acknowledges that 'the contributors to today's (health) epidemic are manifold and a broad societal response is required. But marketing can no longer be ignored as a significant part of this massive problem.'"
(It's looking more and more like marketing is the answer AND the problem!)

Thursday, May 19, 2011

To Scott Walker - where's the love, dude?!

Apparently going after teachers and unions isn't enough for Wisconsin Governor Scott Walker. He's now focusing his attention on banning the hospital visitation rights of same-sex couples.

Here's what the Milwaukee Journal Sentinel has to say:
Madison - Gov. Scott Walker believes a new law that gives gay couples hospital visitation rights violates the state constitution and has asked a judge to allow the state to stop defending it.
Who goes to see dying patients in the hospital? Only those who really love them. So why Wisconsin's governor wants to ban the dying from receiving visits from a loved one is beyond me. But then again, understanding the rabidly conservative mindset is beyond the scope of my imagination.

Wednesday, May 18, 2011

Here's the Harvard Business Review, on the marketing of one's soul...

Let's just say I'm a little skeptical of what they're teaching over at Harvard. That's because so many of those who were nurtured and educated in the Ivy League later went on to develop "innovation in finance" that caused our economy to drop off a cliff back in 2008.

But I'm always curious to hear what Harvard has to say about key topics, and was highly intrigued when this eye-catching headline, Don't Sell Your Soul, Market Itcame across my Twitter feed.

Turns out it's a post by Dan Pallotta about building up the "philanthropy" market. According to this article:
"Most people want to help others. Their lives would feel incomplete without this connection to humanity. We can tap into this human desire by marketing compassion with the same rigor as we market luxury cars."
(Highlighting is Pallotta's, not mine.)

Which I guess is a good idea, though now I see images of sleek cars snaking their way across challenging terrain, not starving children who need to be fed or offered polio shots for free.

One thing I don't understand - who'll pay for this marketing? In business, marketing departments are paid for and funded by income generated by the commodity they are selling. So who pays for the marketing budget of a philanthropy? Are we going to divert funds from those who need the particular charity and instead flow that funding into marketing campaigns? For what purpose?

Who is Paul Ryan?

[Yes, there is the intentional hint of Ayn Rand in the headline, for those who are wondering. Because why not evoke John Galt when talking of Paul Ryan?] 

But it's a fair question to ask - this "who is Paul Ryan" question, since he seems to have seized control of the GOP's platform of late.

He's so out in front of the curve that Newt Gingrich, a man who aspires to be the GOP nominee for president, slammed Ryan's Medicare reform plan, which has been adopted by the GOP-dominated House. Referring to the Ryan plan, Gingrich said he was "against a conservative imposing radical change." [Why do I believe that Newt's campaign is not long for this world?]

A Product of America's Dairyland
What we know about Ryan: that he comes from Wisconsin - a Midwestern state with an economy that wears its cheesehead proudly. Yes, there's a mix of agricultural, industrial and dairy in its economy, but Wisconsin brands itself as "America's Dairyland" right there on its license plates. Its largest city, Milwaukee, is bordered less by suburbs and more by farmland, a strong contrast to the miles upon miles of suburia that ring Chicago.

I live not far from the Wisconsin border - and whenever I cross over into Wisconsin for a visit, I always marvel at the roads. To this Illinoisan, Wisconsin seems to take care of its infrastructure. At least on the surface. Their public pension plan, deemed by Pew Research as one of the most fiscally responsible in the nation,  is still underfunded and has come under strong attack by Scott Walker, the state's Republican governor.

Ryan sits in the congressional seat once occupied by Democrat Les Aspin. He hails from the state that once gave us Senator Joe McCarthy and today is presided over by Walker, who is actively shaping state government into a very conservative mold.

Wisconsin is Midwestern, proud of its heritage as a dairy producer and relatively ignored by national media. [Until recently - when was the last time you saw tweets about any state's Supreme Court elections?! Way to grab the national focus, Cheeseheads!].

And obviously there are great passions that run through some of its political leaders, Ryan included.

Wednesday, May 11, 2011

30 + years of Newt bombs

Fasten your seatbelts - the war for attention in 2012 has begun!

Newt Gingrich is apparently taking his contract with America seriously once again. He's running for the nation's highest office. He's not one to let serving divorce papers to a woman undergoing cancer treatment stop him from such a noble pursuit.

Mother Jones has pulled together some Newt bombs - utterances made by Gingrich over the last 30+ years. Let's take a look! And let's consider if a man with this rhetorical history should serve as the leader of the world's most powerful country...

1978 In an address to College Republicans before he was elected to the House, Gingrich says: "I think one of the great problems we have in the Republican party is that we don't encourage you to be nasty. We encourage you to be neat, obedient, and loyal and faithful and all those Boy Scout words." He added, "Richard Nixon…Gerald Ford…They have done a terrible job, a pathetic job. In my lifetime, in my lifetime—I was born in 1943—we have not had a competent national Republican leader. Not ever."
1983 "If in fact we are to follow the Chamberlain liberal Democratic line of withdrawal from the planet," he explains, "we would truly have tyranny everywhere, and we in America could experience the joys of Soviet-style brutality and murdering of women and children."  
1985 Upset with Democrats' foreign policy stance, Gingrich observes, "Adolph Hitler must somewhere be burning in hell, wishing he had lived two generations later, so he could manipulate Americans instead of Englishmen."
1985 "I have an enormous personal ambition. I want to shift the entire planet…I just had breakfast with [administration officials Richard] Darman and [David] Stockman because I'm unavoidable. I represent real power."
1988 "I spent a fair length of time trying to come to grips with who I was and the habits I had, and what they did to people that I truly loved. I really spent a period of time where, I suspect, I cried three or four times a week. I read Men Who Hate Women and the Women Who Love Them and I found frightening pieces that related own life."
1989 He explains to the Washington Post why he fights with his second wife, Marianne: "It's not even that it matters to me. It's just the habit of dominance, the habit of being the center of my staff and the center of the news media." 
1994 He sums up his political philosophy: "People like me are what stand between us and Auschwitz. I see evil all around me every day." 
2011 Secular-socialists give way to atheist-Islamists: "I am convinced that if we do not decisively win the struggle over the nature of America, by the time [his grandchildren are] my age they will be in a secular atheist country, potentially one dominated by radical Islamists and with no understanding of what it once meant to be an American." His spokesman later clarified that Gingrich meant either Islamists or atheists would take over America, not both. 
There's plenty more over at Mother Jones. Check it out...

Tuesday, May 10, 2011

When following the leader could lead to corruption...

I think it is safe to say that Goldman Sachs is one of the leading investment banks in the United States today - if not the leading bank. Our financial sector has become so shrunken, who else could rival the golden boys for the title of America's Greatest Bank? Perhaps JPMorgan Chase, but as I understand it, they're weighed down by the debt-laden consumer side of banking.

That's why it is incredible that the nation's leading bank is so very busy this year fending off corruption charges. Sad for the nation when the leading financial institution is alleged to be acting corruptly in multiple instances.

So they put aside journalistic ethics for a moment

Whoopsie! Lots of egg on lots of faces when the glowing tributes made by many Chicago journalists about the outgoing King Mayor of Chicago ended up in a furniture ad.

After the shit hit the fan, many of the journalists had themselves removed from the promotional video.

And the furniture company ended up apologizing for not being more clear about the purpose of the video. (Journalists believed it to be a gift to Mayor Daley, not an ad to be broadcast on TV with the furniture company's name prominently displayed.)

Hat tip to the very best tweeter of all time - Roger Ebert... if he's not on your twitter feed, he should be!

Sunday, May 8, 2011

A career trajectory rivaling the Rock's for oddity...

Mitch Marrow has been on the ride of a lifetime, with a career that rivals the Rock's (Dwayne Johnson > The Rock > The Tooth Fairy) for twists and turns.

Marrow started in the Ivy League, graduated to the NFL, transitioned to Wall Street and has now left the big leagues for a gig babysitting dogs.

His mother is his partner.

Here's the WSJ story with all the details...

When it comes to torture, Bush/Cheney/Rummy can't have it all...

Paul Krugman's NY Times blog post, "Shadow of the Torturers," is a painful reminder of inconvenient truth that all Americans not molded in the model of John Wayne had to confront back in the days of Bush-Cheney: we became a country that openly endorsed torture as a national security measure.

It is interesting to note that those who endorsed the use of torture during the war on terror were also those who did anything they could to get out of serving their country during the war on Viet Nam.

In the late 1960s, when the Viet Nam war was raging, GW Bush - son of an authentic war hero - joined the National Guard, not active military duty, and in the early 1970s, apparently went AWOL and failed to fulfill his National Guard commitments.

As a young man in the 1960s, Dick Cheney pulled any string available to get out of the draft, and in return, received five draft deferments. Though eligible to serve his nation as a soldier in a time of war, he chose instead to stay home.

The two men grew up to become leaders of the most powerful nation in the world. In their roles as leaders of a nation devoted to liberty and freedom, they endorsed and employed the use of torture on military noncombatants.

Today, some of those Bush administration policy makers rue Obama's decision to move away from the use of waterboarding and other "enhanced interrogation techniques."

Saturday, May 7, 2011

Technology: Helpful or Harmful?

Mark Thoma posts a 70 minute video of a panel of experts looking at the impact of technology on the noggin.

Like Thoma, too distracted to watch the entire thing right now, but I urge you to watch the opening. It's hilarious.

"The F***ing Epic Twitter Quest of @MayorEmanuel"

For those intrigued by fusion of twitter and Rahm Emanuel's recent and successful quest for the top spot in Chicago, Dan Sinker's "The F***ing Epic Twitter Quest of @MayorEmanuel is available for pre-order.

Thursday, May 5, 2011

Pointing to an unusual suspect for the increase in unemployment claims

Troubling unemployment figures this week - according to a widely quoted AP story, it looks like new unemployment applications have hit an 8-month high. This elevates fears that the "recovery" has hit a bump in the road, which could mean anemic hiring patterns this spring.

According to the story, New York is to blame - specifically, their schools:
"A Labor department spokesman blamed much of the increase in unemployment applications on an unexpected spike from New York. More school systems than usual closed for spring break last week. That resulted in 25,000 layoffs. The department didn't anticipate the closures when making seasonal adjustments, the spokesman said.

Huh? Schools closing for spring break resulted in 25K layoffs? The Labor department did not realize that spring break in NY would require seasonal adjustments? Is it a "layoff" when hourly workers stay home for the week of spring break?

Anyway, in this "recovery," a spike in unemployment claims is not good, no matter what the reason.

Wednesday, May 4, 2011

The advantages of size and might, as revealed by the Easter egg hunt...

A large crowd clusters near the glass doors. All are gathered together on this morning via the annual ritual known as the Easter brunch, celebrating the epic Christian holiday that commemorates resurrection and rebirth.

Outside, it is a sunny but chilly spring morning. Inside, the room is full of people preparing for the Easter egg hunt. Little girls dressed in pretty dresses. Boys wearing button down shirts and khaki pants. Adults happy with the knowledge that spring has (hopefully) arrived.

All of the children are eager for the impending hunt. They cluster near the door for easy access to the patio outside. They see bright plastic eggs splash vibrant color on the beautiful green lawn. The excitement builds. You can hear the murmur of children wondering when it will start.

And finally, the moment all the children have been waiting for arrives. The doors open - and the crowd spills out past the patio and onto the well manicured lawn where the eggs lay in plain view.

Only the eagerness has turned into a frenzy. Younger children are getting pushed around by the bigger children. In the adults who watch, a worry tickles the mind - that the race for the eggs may get ugly. The stampede may result in a trampled child. That the lovely Easter morning may turn tragic.

Tuesday, May 3, 2011

A quick look at consumer leverage

Two posts in the blogosphere caught my eye this morning - both focusing on consumer leverage.

Calculated Risk points us to a Federal Reserve press release noting the "April 2011 Senior Loan Officer Opinion Survey." Opinions are good, but the release also seems to indicate there is data showing banks are easing standards and terms on loans for both businesses and consumers. Especially consumers:
"...And the net fraction of banks that reported having become more willing to make consumer installment loans rose to its highest level since the first half of 1994."
The whole mortgage-backed thing is kind of in the toilet right now, along with home prices, but this info from the Fed indicates banks are willing to lend to consumers without requiring a home to serve as collateral for the loan.

My initial response was cautious optimism. Perhaps the investment the nation  had made in the banks (via TARP, etc.) was finally paying off with bankers now investing in consumers.

Then I saw this post from Paul Krugman. And my optimism was shattered once again. He's got a chart that shows a sharp upward shift in consumer leverage starting in 2001. As corporations were deleveraging, consumers were leveraging up. According to Krugman, "it's now standard to focus on household leverage as a key part of what went wrong in 2008."

So it seems like the opportunity for consumers to leverage up once again is a double-edged sword. Do we want consumers to become even more indebted and leveraged? Seems not the way to go. The answer seems to lie in boosting salaries of American consumers, not just their ability to borrow. Here's hoping we see wage increases in the recovery we're supposed to be experiencing. But that may prompt the Fed to issue other releases, warning of the dangers of inflationary wage increases...

Monday, May 2, 2011

Reflections on the death of Osama Bin Laden

If you are old enough to remember 9/11/01, it is a day seared into memory. Bright flames flickering against white walls. Fingers of fire illuminating a deep and overwhelming hatred of our country. Thick, black smoke choking out the sun. Ash-covered survivors expressing terror and shock. The silence that comes when all forms of flight are grounded.

Above all, the grief. The tear-stained burden of grief assumed not just by the families who lost a loved one that day, but by millions of us who witnessed the devastation. Grief on a massive level. The kind of national grief we are unaccustomed to experiencing in America.

Osama Bin Laden was given credit for creating the monstrous rubble of 9/11. His will was done that day, the day that thousands of Americans died in the attacks.

The insanity of the attack was what struck me most. It was astonishing to learn that people were possessed of the kind of hate that could cause them to fly planes into buildings, bring down the World Trade Centers, turn the Pentagon into flames, create a black hole in a Pennsylvania field, exterminate thousands of Americans and kill a little girl on her way to Disney.

Last night, President Obama announced that Osama was dead. The man who was rumored to be living in Afghan caves was hiding out in a compound located in a resort town in Pakistan just a mile from the Pakistan military academy.

[How did we not know that?! How is it possible for the world's most wanted man to hide out in plain sight like that? And how can we possibly consider Pakistan an ally?!]